Distribution

Industry Situation

The distribution industry ranges from office supplies to medical products. Distributor sales representatives must work to build their base of business and thus their sales compensation rises and falls with the growth of their territory. As such, sales representatives experience workload issues as they try to expand their business. The effort required to manage the baseline business does not always allow for significant time to invest in growth. 
 

Client Situation

In previous years, this distributor experienced declining growth. The perceived challenge was managing the existing customer base while identifying new customers and penetrating accounts with low share of wallet.
 

Key Issues

The company asked AGI to assist in the following areas:

	Baseline how sales representatives allocate available time (both sales and non-sales related).
	Identify inhibitors that affect both: sales effectiveness (getting more sales time) and sales efficiency (being more productive with the available sales time).
	Identify preliminary areas for sales productivity improvement and impact on revenue lift / ROI.

AGI Solutions

AGI conducted a sales time study based on a statistically significant sample size of sales representatives with varying territory compositions. The purpose of the study was to gauge how sales people allocate their available time across 10 categories from sales to non-sales related activities. Topline findings were:
 

	Engaged selling time is 21%. However, best-in-class distributors’ engaged selling time is 43%.
	Reps spend 2x as much time on order entry as benchmark distributor reps.
	Reps spend much of their day “putting out fires.” As such, they tend to react versus plan, spending half as much time on planning as benchmark reps.
	Reps spend about 40% less time prospecting than benchmark reps. On average, reps spend 80% of their time with existing customers, and acquiring new customers is difficult with their current account workload.
	Reps tend to have large, non-exclusive territories, and some reps have to travel an hour or more to visit a group of accounts. This leads to higher travel times than other distributor reps.

 

Outcomes

As a result of the study, the company focused on three initiatives: 1) deploying sales assistants to enable reps to proactively expand the business, 2) optimizing territory workload to stimulate new customer growth, and 3) providing reps with greater incentive to transition ordering to e-commerce ordering channels. These changes increased engaged selling time from 21% to 32%. Increased sales costs, due to the addition of the sales assistants, was more than offset with the 11% improvement in sales rep's sales productivity.